A factor pointing toward the use of the foreign currency as the functional currency is a significant level of intercompany inventory transfers.

Question

Quizplus · Accepted Answer

A significant level of intercompany inventory transfers does not necessarily point toward the use of the foreign currency as the functional currency. The determination of the functional currency is based on the primary economic environment in which the entity operates, considering factors such as the currency that mainly influences sales prices, labor, materials, and other costs, rather than the level of intercompany transfers.

A Factor Pointing Toward the Use of the Foreign Currency